18 February, 2017

Neoliberal 'logic' recruited to justify Trump's Goldman Sachs picks

by system
failure

Although a
number of Trump supporters appear to be particularly puzzled, if not
disappointed, with his obscurely scandalous inspiration to flood his
administration with Goldman Sachs executives, others are trying to
justify his picks through the usual neoliberal 'logic'.

Therefore, a
usual, overwhelmingly simplified response is of the type 'what did
you expect, hire a simple worker to run the economy?'

Despite that
such a response implies that you have to succumb to the current
financial status where banksters should always control the economy
and rescued in times of financial meltdowns no matter if they are
responsible for them, the response itself is actually a logical leap.

This way of
thinking through logical leaps is heavily propagated throughout the
Western societies by the dominant neoliberal doctrine, whether people
support this doctrine or not. In previous
article we referred to some "logical leaps"
that the establishment uses to force the individual to bypass a
certain rational hierarchy.

In this
case, the logical leap is equally obvious, once you take a closer
look. Because between a top Goldman Sachs executive and a simple
worker, there are millions of other options for a president. A very
good example of such an option, is the Nobel prize economist, Joseph
Stiglitz.

The case of
Joseph Stiglitz is particularly interesting because it shows how such
brilliant economists were literally undermined by former Goldman
Sachs executives inside US administrations during the 90s fast
growing bubble economy.

The large
laboratory, chosen by the gurus of the free market to conduct their
new experiment in the late 90s during the Clinton administration, was
South-East Asia. Under the American pressure, countries like South
Korea and Thailand, withdrew all their restrictions allowing the
inflow of capital from the West. This helped for the so-called “Asian
miracle” in the economy.

But a group
of economists in the White House, headed by Joseph Stiglitz, worried
that, the flood of money from the West, would fund a massive
speculative bubble in property, and when the boom collapsed, the
money would flee, leaving countries like Thailand and South Korea
decimated. According to Stiglitz, all this flow of money was not for
the interest of Korea or US, but for the interest of a very small
group of people making money from these medium-term capital flows,
i.e. some bankers and hedge funds.

However, the
group faced the opposition of Robert Rubin, which was the Secretary
of Treasury at that time, and former co-chairman in Goldman Sachs.
Rubin was preventing the warnings of the group to reach the
president.

Stiglitz and
his team turned out to be right. The Asian crisis
began in Thailand. Hundreds of thousands of offices and apartments
were built, but nobody wanted them, and brokers went bankrupt under
the weight of loans. Investors from the West panicked and rushed to
get their money out of the country. The panic began to spread first
in South Korea.

Providing
billions of dollars in loans, the IMF rescued western investors and
pushed the taxpayers of the countries deeper into debt because they
had to repay the IMF. The result of the cuts was the destruction of
the area. In Indonesia, the government subsidies were removed as
instructed by the western bankers. Prices soared and within a few
months, in a country of more than 200 million, 15% of the male
workforce lost their jobs. Economic output fell by 14%. The economy
collapsed and ethnic and religious strife began. The same happened in
Thailand and South Korea. Millions of people went back into poverty
from which they thought they had escaped forever. By the mid 1998,
the Asian economies collapsed. It was the biggest disaster for
countries since the big recession of the 30s.

The
whole story shows that there are plenty of options for a president
other than former Goldman Sachs executives who will only seek to
empower the Wall Street cartel. Donald Trump did it straight. He
literally hired Goldman Sachs to run the US economy and his first
move was to deregulate the financial system as the
vampire bank and the Wall Street mafia wanted. The gates of hell have
opened again for another financial meltdown and the American people
will be called again to pay for it.